Abraxas Exits 2009 Larger and Stronger
Abraxas Petroleum reported financial and operating results for the three and twelve months ended December 31, 2009 and reserves as of December 31, 2009.
Financial and Operating Results
The twelve months ended December 31, 2009 resulted in:
- Production of 1.6 MMBoe (4,476 Boepd);
- Revenue of $52.8 million;
- EBITDA of $34.6 million;
- Cash flow of $23.9 million;
- Net loss of $18.8 million, or $0.34 per share; and
- Adjusted net income of $8.9 million, or $0.16 per share, excluding certain non-cash items.
Adjusted net income, excluding certain non-cash items, for the year ended December 31, 2009 was $8.9 million, or $0.16 per share, compared to adjusted net income, excluding certain non-cash items, of $42.8 million or $0.87 per share during 2008. For the year ended December 31, 2009, adjusted net income, excluding certain non-cash items, excludes unrealized losses on derivative contracts of $27.7 million. For the year ended December 31, 2008, adjusted net income, excluding certain non-cash items, excludes unrealized gains on derivative contracts of $37.9 million, the loss attributable to the ceiling-test impairment of $116.4 million, the loss attributable to the non-controlling interest that exceeded the non-controlling interest equity capital of $9.3 million and the loss on exchange rights of $7.4 million.
Unrealized gains or losses on derivative contracts are based on mark-to-market valuations which are non-cash in nature and may fluctuate drastically period to period. As commodity prices fluctuate, these derivative contracts are valued against current market prices at the end of each reporting period in accordance with ASC 815, "Derivatives and Hedging," as amended and interpreted, and require Abraxas to either record an unrealized gain or loss based on the calculated value difference from the previous period end valuation.
Reserves as of December 31, 2009
Abraxas' proved reserves at December 31, 2009 were 24.9 MMBoe. In addition, DeGolyer and MacNaughton, Abraxas' independent reservoir engineering firm, estimated 7.4 MMBoe of probable reserves and 5.1 MMBoe of possible reserves on certain properties. Of Abraxas' proved reserves, 65% were natural gas and 56% were classified as proved developed. Abraxas operates over 82% of its proved reserves (by volume) and its reserve life index exceeds 15 years. D&M estimated approximately 92% of Abraxas' proved reserves (by volume) and the residual reserves were estimated internally.
Total capital expenditures for 2009 were approximately $16.5 million (excluding divestitures). Overall 3.7 MMBoe of proved reserves were added which was offset by 1.6 MMBoe of production and 2.2 MMBoe of revisions, for a finding and development cost of $14.43 per Boe and an 88% reserve replacement for 2009 under the current SEC regulations. Under previous SEC regulations (which are discussed in more detail below) which include 2.0 MMBoe of positive revisions for year-end commodity prices and 5.0 MMBoe of positive revisions for 5-year PUD limitations, Abraxas' reserve replacement would have been 512% and its finding and development cost would have been $2.48 per Boe.
"2009 can be summarized as a year of the more things change, the more they are the same. After enduring a year of extreme stress in the financial markets, we find ourselves at the end of 2009 once again owning producing properties that we had originally contributed to our master limited partnership. Nonetheless, we exit 2009 as a much larger, stronger company, and one capable of pursuing our exciting upside potential. We are quite pleased with our position in several resource plays, namely the Bakken/Three Forks oil play in the Williston Basin and the emerging Eagle Ford shale play in South Texas and we look forward to increased activity in these plays as well as others throughout 2010 and beyond," commented Bob Watson, Abraxas' President and CEO.
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